SOUTH AFRICAN PORT CAPACITY AND UTILISATION REPORT

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SOUTH AFRICAN PORT CAPACITY AND UTILISATION REPORT
SOUTH AFRICAN PORT CAPACITY AND UTILISATION REPORT

                               2015/16

               PUBLIC CONSULTATION ROADSHOW
                       DISCUSSION DOCUMENT
               Comment is invited via written submission by:
               30 June 2016, addressed to: The Chairperson,
               Ports Regulator, Private Bag X54322, Durban, 4000
               Or email submissions to: info@portsregulator.org.
SOUTH AFRICAN PORT CAPACITY AND UTILISATION REPORT
Table of Contents
Acronyms ............................................................................................................................................... vi

1.      Introduction .................................................................................................................................... 1

2.      The Ports Regulator of South Africa’s Mandate for Infrastructure and Efficiency Regulation ....... 3

3.      SA port capacity and utilisation ...................................................................................................... 6

     3.1. Capacity in the overall system ..................................................................................................... 6

     3.1.1. Container terminal capacity ...................................................................................................... 7

     3.1.2. Container terminal capacity and volumes ................................................................................ 9

     3.1.3. Container Terminal Utilisation ................................................................................................ 14

        3.1.3.1. Container moves per ship working hour.......................................................................... 16

        3.1.3.2. Gross crane moves per hour (GCH) ................................................................................. 18

        3.1.3.3. Time spent at anchorage ................................................................................................. 22

        3.1.3.4. Ship turnaround time ....................................................................................................... 24

        3.1.3.5. Dwell times ...................................................................................................................... 24

     3.1.4. Summary ................................................................................................................................. 26

3.2. Automotive/ Ro-ro Terminals ........................................................................................................ 27

     3.2.1. Ro-ro Terminal Capacity.......................................................................................................... 27

     3.2.3. Ro-ro Terminal Utilisation ....................................................................................................... 31

        3.2.3.1. RoRo terminals units per ship working hour ................................................................... 32

        3.2.4. Summary ............................................................................................................................. 33

3.3. Dry Bulk Terminals ......................................................................................................................... 34

     3.3.1. Dry Bulk Terminal Capacity ..................................................................................................... 35

     3.3.2. Dry Bulk Capacity and Volume ................................................................................................ 36

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3.3.2.1. Manganese....................................................................................................................... 40

        3.3.2.2. Coal .................................................................................................................................. 41

        3.3.2.3. Iron Ore ............................................................................................................................ 41

   3.3.3. Terminal Utilisation ................................................................................................................. 42

        3.3.3.1. Throughput in relation to design and installed capacity ................................................. 42

        3.3.3.2. Commodity handling rate ................................................................................................ 44

        3.3.4. Summary ............................................................................................................................. 46

3.4. Breakbulk and multi-purpose cargo............................................................................................... 48

   4.4.1. Break Bulk and Multipurpose Terminal capacity .................................................................... 51

   3.4.2. Break Bulk and Multipurpose Capacity and Volume .............................................................. 51

        3.4.3. Summary ............................................................................................................................. 54

3.5.       Liquid Bulk Terminals ................................................................................................................ 55

   3.5.1.          Liquid Bulk Terminal capacity ........................................................................................... 57

   3.5.2.          Liquid Bulk Capacity and Volume ...................................................................................... 58

   3.5.3.          Liquid Bulk Terminal capacity utilisation .......................................................................... 61

        3.5.4.         Summary ....................................................................................................................... 62

   4.      Conclusion ................................................................................................................................. 63

Figure 1: Mandate, functions and objectives for infrastructure regulation ........................................... 3
Figure 2: Historical container volumes (2001/02 to 2013/14) ............................................................... 9
Figure 3: Container volumes: Year on year and Compound Annual Growth Rates (CAGR) 2009/10 –
2014/15. ................................................................................................................................................ 11
Figure 4: Compound container growth rates and planned capacity to meet growth .......................... 12
Figure 5: Overall container capacity and volume (2010/11 – 2041/42) ............................................... 13
Figure 6: Use of container terminal's design and installed capacity .................................................... 15
Figure 7: Container moves per ship working hour (ATS) ...................................................................... 17
Figure 8: TEU throughput and TEUs per crane ..................................................................................... 18
Figure 9: Gross Crane Moves per Hour (GCH) 2010/11 to 2014/15. .................................................... 19
Figure 10: Average GCH: Container Terminals (2009/10 to 2014/15) .................................................. 20
Figure 11: Gross crane moves per hour per terminal (target vs. actual) .............................................. 21

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SOUTH AFRICAN PORT CAPACITY AND UTILISATION REPORT
Figure 12: Vessel time spent at anchorage (by port and average) ....................................................... 23
Figure 13: Ship Turnaround Time - container terminals. ...................................................................... 24
Figure 14: Cargo dwell times (targets and actual) ................................................................................ 25
Figure 15: Historical Roro volumes (2001/02 – 2013/14)..................................................................... 28
Figure 16: Year-on-year vehicle volume growth rates (2009/10 – 2014/15) ....................................... 29
Figure 17: Overall automotive capacity and volume projections (2011/12 to 2041/42) ..................... 30
Figure 18: Overall automotive capacity and volume projections (2012 - 2042) .................................. 30
Figure 19: RoRo terminal design and installed capacity and utilisation levels ..................................... 31
Figure 20: Vehicles units handled per ship working hour..................................................................... 32
Figure 21: Ro-Ro performance targets (units per ship working hours 2010/11 – 2012/13) ................ 33
Figure 22: Extent of terminal area for dry bulk by terminal operator excluding TPT ........................... 35
Figure 23: Year-on-year and compound annualised dry bulk volume growth rates ............................ 37
Figure 24: Annual Dry Bulk volumes (tons) (2001/02 – 2013/14) ........................................................ 37
Figure 25: All dry bulk volume projections and estimated capacity requirements .............................. 38
Figure 26: Dry bulk capacity and volume .............................................................................................. 39
Figure 27: NPA’s estimates of volume and capacity requirements for Manganese terminals ............ 40
Figure 28: NPAs estimates of volume and capacity requirements for coal terminal ........................... 41
Figure 29: NPAs estimates of volume and capacity requirements for Iron Ore terminal .................... 42
Figure 30: Dry bulk design and installed capacity ................................................................................. 43
Figure 31: Rate at which dry bulk terminals' design and installed capacity are used .......................... 43
Figure 32: Iron ore handling rate per hour (targets and actuals) ......................................................... 44
Figure 33: Iron Ore handling rate targets ............................................................................................. 45
Figure 34: Coal loading and unloading rates per hour.......................................................................... 45
Figure 35: License holders in breakbulk terminals and proportion of terminal extent ........................ 48
Figure 36: Proportions of licenses held at Multi-purpose terminals by license holders (based on
number of license) ................................................................................................................................ 49
Figure 37: Proportion of MPT terminal extent by license holder ......................................................... 50
Figure 38: Year on year and compound annual break bulk volume growth rates ............................... 52
Figure 39: 31 year forward break bulk volume estimates and capacity growth rates ......................... 52
Figure 40: Extent of use of design and installed capacity at breakbulk terminals ............................... 54
Figure 41: Liquid bulk license holders as proportion of licenses .......................................................... 55
Figure 42: Liquid bulk terminal operator’s extent of terminal area ..................................................... 56
Figure 43: NPA 31 year forward liquid bulk volume estimates and capacity projections .................... 59

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SOUTH AFRICAN PORT CAPACITY AND UTILISATION REPORT
Figure 44: NPAs Liquid Bulk capacity, shortfall/surplus and projected volumes (2010/11 - 2041/42)
Option 1. ............................................................................................................................................... 60
Figure 45: NPAs Liquid Bulk capacity, shortfall/surplus and projected volumes (2010/11 - 2041/42)
Option 2. ............................................................................................................................................... 60
Figure 46: NPAs Liquid Bulk capacity, shortfall/surplus and projected volumes (2010/11 - 2041/42)
Option 3. ............................................................................................................................................... 61
Figure 47: Liquid bulk terminal capacity and utilisation ....................................................................... 61
Figure 48: NPA revenue and capex expenditure by cargo handling type (2010/11 - 2014/15) ........... 64

Table 1: Overall capacity in SA terminals - all cargo handling types....................................................... 6
Table 2: Container Terminal Capacities .................................................................................................. 7
Table 3: Historical Compound Annual Growth Rate for Container traffic per port (2001/02 - 2013/14).
.............................................................................................................................................................. 10
Table 4: Container moves per ship working hour – based on design and installed capacities, 2013
performance and 6 year average .......................................................................................................... 16
Table 5: Year on year GCH and 5 year compound annual growth rate ................................................ 20
Table 6: Automotive terminal capacity ................................................................................................. 27
Table 7: Historic Roro volume per annum and corresponding growth rate 2001/02 - 2013/14 ......... 29
Table 8: SA Dry Bulk terminal capacity ................................................................................................. 35
Table 9: Compound Annual Growth Rate, Dry bulk (2001/02 - 2013/14) ............................................ 38
Table 10: Dry bulk cargo handling rates: design, installed, actual and average performance ............. 46
Table 11: Break bulk terminal capacity ................................................................................................. 51
Table 12: Historical Break bulk volume growth .................................................................................... 53
Table 13: Liquid Bulk Terminal license holder's extent of terminal area.............................................. 56
Table 14: Extent and capacity of terminals held by TOPS Liquid Bulk operators ................................. 57
Table 15: Liquid Bulk terminal capacity ................................................................................................ 57
Table 16: Historical liquid bulk volume growth rates ........................................................................... 58

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SOUTH AFRICAN PORT CAPACITY AND UTILISATION REPORT
Acronyms

ATS – Across the Ship Rate
CAGR – Compound Annual Growth Rate
CBM – Conventional Buoy Mooring
CTCT – Cape Town Container Terminal
DCT – Durban Container Terminal
FDM – Freight Demand Model
GDP – Gross Domestic Product
GCH – Gross Crane Moves per Hour
GRT – Gross Registered Tons
LTPDF/P – Long Term Port Development Framework/Plan
MDS – Market Demand Strategy
MOPS – Marine Operator Performance Standard
MTSF – Medium Term Strategic Framework
NCT – Ngqura Container Terminal
NPA – National Ports Authority
NPCC – National Port Consultative Committee
PCC – Port Consultative Committee
PECT – Port Elizabeth Container Terminal
RAB – Regulatory Asset Base
Roro – Roll-on, Roll-off
RTG – Rubber Tyre Gantry
SBM – Single Buoy Mooring
STS – Ship to Shore crane
SWH – Ship working hour
TEUs – Twenty Foot Equivalent Unit(s)
TOPS – Terminal Operator Performance Standard
TPT – Transnet Port Terminals
UNCTAD – United Nations Conference on Trade and Development
VTS – Vessel Traffic Service
WACC – Weighted Average Cost of Capital
SOUTH AFRICAN PORT CAPACITY AND UTILISATION REPORT
“There are a lot of insufficiencies to measure port capacity due to ….the sheer number of parameters
involved; the lack of up to date, factual and reliable data which are collected in an accepted manner
and available for publication or divulgation, the absence of generally agreed and acceptable definitions,
the profound influence of local factors on the data obtained and the divergent interpretations given by
various interest to identical results…..port performance and capacity cannot be determined by only one
indicator or by a single all-encompassing value. The complexity of port operations and in particular the
interaction between various essential elements such as the efficiency with ships, equipment and labour
utilised, make it compulsory to rely on a set of indicators if one wants to arrive at an accurate and
meaningful evaluation of a ports performance” Park, Yoon & Park (2014: 176).
SOUTH AFRICAN PORT CAPACITY AND UTILISATION REPORT
1. Introduction
Economic regulation aims generally to address market failures or monopoly behaviour where there
are no effective competitive conditions to set efficient prices in the provision and maintenance of
infrastructure.

Economic regulation generally must protect the users and infrastructure owners by creating an
enabling environment characterised by openness, transparency, inclusivity and due process. Critically,
economic regulation must bring about allocative and/or productive efficiencies as well as open up
market to appropriate competition or competitive conditions through coherent regulatory framework
and tariff determination processes.

In the case of the South African ports regulation, the National Ports Act of 2005, establishes the Port
Regulator of South Africa as an independent agency of the Department of Transport with the following
mandates: to exercise economic regulation of the ports system in line with government’s strategic
objectives; promote equity of access to ports and to facilities and services provided in ports; and
monitor the activities of the Authority to ensure that it performs its functions in accordance with the
Act.

The Regulator has progressively aimed to improve benefits in the port system for port users, industry
and the broader South African economy and has been balancing tariffs from their historically high
levels, with tariffs increasingly being rationalised; the regulatory trajectory is proactive, moving
towards a fair tariff incidence in the future.

This process in turn is affected by the capex programme of the Authority which is an important factor
in ensuring not only that there is capacity in the system but also affects port pricing by influencing
tariffs.

This report does not subsume the Authority’s function for “planning, construction, development and
maintenance of ports” as per section 68 of the National Ports Act. Instead the report will represent an
assessment of NPA published port capacity and analysis of its utilisation so as to:

                 Establish capacity levels in the SA port system
                 Analyse the extent to which this capacity is utilised
                 Reflect on performance of SA terminals as it relates to the use of the infrastructure
                  and projected demand in the form of volumes
                 Reflect on planned capacity to meet projected demand whilst reflecting on trends in
                  previous years.
SOUTH AFRICAN PORT CAPACITY AND UTILISATION REPORT
As a discussion document which provides and disseminates information, this report will:

                  Facilitate discussions with the Authority, port users and industry players on the role
                   of and treatment of capex in the Regulatory Framework;
                  Lead to the development of commonly accepted measures for port capacity and
                   utilisation levels as they influence and impact on the possible capacity expansions and
                   the tariff manual’s envisaged port efficiency measures; and
                  Contribute to the definition of what is used and useful capacity as it relates to the
                   Regulatory Asset Base.
                  Be the basis, for benchmarking the performance of South African port terminals. This
                   will be alongside the Authority’s Performance Standards with Terminal, Marine, Road
                   and Rail Operators known as TOPS, MOPS, HOPS and ROPS respectively.

The discussion document is structured as follows:

The mandate of the Regulator for infrastructure and efficiency regulation is outlined and briefly
discussed in Section 2 which provides a background and outlines the strategic and necessary link
between the Regulator’s assessment of South Africa’s port capacity and productivity with the tariff
reform process and thus the relevance of the Authority’s capex to the regulatory processes. The
section summarily highlights concerns with the capex programme without repeating the complexities
in the South African port pricing and tariff system which are adequately covered respectively in the
Regulatory Manual for Tariff Years 2015/16 – 2017/18 and the Tariff Strategy for the South African
Ports System 2015/16 documents (for more on these access: www.portsregulator.org/economic and
follow links to tariff methodology and tariff strategy documents).

Section 3 focusses on an assessment of the Authority’s capacity and utilisation rates in relation to both
performance or productivity and planned capacity in the five different cargo handling types, starting
with defining and setting a common basis for capacity and utilisation.

Section 4 summarises and concludes on the discussed capacity and utilisation and highlights the
various areas for further investigation by the Regulator in consultation with the NPA and port users.

Due to the long history of the development of the port system in South Africa, this report cannot be,
and is not intended to cast judgement on the Authority, and port operators, public or private; but
should rather be used as a baseline for improvement where necessary, and an acknowledgement of
excellence where relevant.

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Port Capacity and Utilisation 2015
SOUTH AFRICAN PORT CAPACITY AND UTILISATION REPORT
2. The Ports Regulator of South Africa’s Mandate for Infrastructure and
   Efficiency Regulation
The mandate of the Regulator for infrastructure and efficiency regulation emanates from the National
Ports Act, Act 12 of 2005, (the Act) particularly section 30 which, in defining the functions of the Ports
Regulator of South Africa (the Regulator), requires the Regulator in subsection (2) (f) to “…regulate
the provision of adequate, affordable and efficient port services and facilities.”

Figure 1: Mandate, functions and objectives for infrastructure regulation

                                       National Ports Act, Act 12 of 2005
                Regulate provision of adequate, affordable and efficient port services and facilities

                                                  Tariff reform
       Tariff methodology – Return on RAB and Capex        Tariff strategy – rebasing of tariff for incidence to reflect
                        allowance                                cost of underlying infrastructure and benefit

                                     Infrastructure and capex development
               Extent of capacity in the system               Utilisation levels and relation to future capex
                 Infrastructure performance                                     programme

             Infrastructure investment signals                            Higher levels of efficiency

To carry out its mandate effectively, with available resources and capacity, the Regulator began a tariff
reform processes to improve port pricing, efficiency and access in the SA system with a particular focus
on creating certainty in port tariff setting by defining a process for determining the Authority’s
Required Revenue.

The “Regulatory Manual for Tariff Years 2015/16 – 2017/18” is a multi-year tariff methodology to
determine the Required Revenue as applied for by the Authority over a three year period. The multi-
year tariff methodology process will enable the Regulator to balance the need to support
infrastructure provision in meeting the country’s current and future needs with ensuring that the
right infrastructure investment signals are sent and that the NPA manages port operations/operators
to achieve higher levels of efficiencies.

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Port Capacity and Utilisation 2015
With regard to infrastructure, and in line with the Directives1 issued in terms of Section 30 of the Act,
the Regulatory Manual allows the NPA to earn a return on the Regulatory Asset Base and an allowance
for capex spending in the form of capital works in progress as it is allowed to:

                     Recover its investment in owning, managing, controlling and administering ports and
                      its investment in port services and facilities;
                     Recover its costs in owning, managing, controlling and administering ports and its
                      investment in port services and facilities; and
                     Make a profit commensurate with the risk of owning, managing, controlling and
                      administering ports and its investment in port services and facilities.

Feedback from stakeholders and port users through the Port Consultative Committee (PCC) in
compliance with the Regulation (15)(1) – (30) and submissions to the Regulator in its stakeholder
consultation/workshops on the Authority’s application inclusive of capex projects, shows that
stakeholders are not entirely happy with the methodology because it does not provide any incentive
for the Authority to reduce costs or improve efficiency as it ensures that it (Authority) recovers its full
costs and profits which may be high due to inefficiencies.

Cognisant of this challenge, the methodology addresses itself to the question of an appropriate return
allowed to the Authority whilst the Tariff Strategy envisages a Phase 3 where the Regulator will
undertake regulatory re-design which may include the adoption of an alternative tariff methodology
that may be required.

With a mandate to ensure port pricing efficiency and efficient use of port assets, the Regulator must,
as part of its current activities and beyond, in allowing the Authority to earn a return, also identify and
conduct an assessment of the utility’s capex programme, and be satisfied that adequate infrastructure
is provided at the right time, that it is used productively and efficiently, and that there is appropriate
phasing of additional capacity.

The Regulator has to date never disallowed any capex applied for. It has only disallowed expenditure
towards the acquisition of the old Durban International Airport and related costs (because the site has
not been promulgated as a port in terms of the Act), operational expenditure for the
operationalisation of Ngqura Manganese terminal, and in the recent ROD the removal of property
outside of port land with the associated rental from the RAB. The Regulator has, instead, clawed back
what the Authority underspent amounting to R8.6billion of capex and the associated return on it over
the past 6 years, in fairness to port users.

1
    Directive 23(2)

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Port Capacity and Utilisation 2015
The Regulator is also in the process of conducting a valuation of main assets in the different asset
classes in the RAB to develop valuation methodologies for these which will address the perennial
problem of the acceptable value of the Authority’s starting RAB. The project will develop a valuation
methodology manual to guide future valuations of the different asset classes by the Authority.

The question of “used and useful” assets that an infrastructure regulator must contend with, will also
be addressed in the valuation project. This reports focusses on the other element which is an
assessment of the extent to which port terminal capacities are currently used and so partly informs
the required future capacity, and a broad sense of when capacity might be required.

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Port Capacity and Utilisation 2015
3. SA port capacity and utilisation
Port capacity refers to the maximum traffic a terminal can handle in a given scenario i.e. the maximum
amount of throughput that can be handled at a terminal (potential production capacity) whereas
capacity utilisation is the actual production output as a percentage of the potential production
capacity i.e., the proportion of capacity actually used in a given period, expressed as a percent. Berth
and terminal area represents, alongside installed cargo handling, operational systems and labour, the
static and dynamic capacity in a terminal. Generally, the physical berths are static, in the short term,
determining the size of vessels that can be accommodated. Terminal area capacity is dynamic,
affected by operational and technological changes i.e. terminal operating equipment, technology and
systems to allow higher stacking and/or increasing number of containers per unit area of terminal or
stockpiling area for dry bulks or storage/parking in the case of Ro-ros. It is generally accepted that
when berth capacity utilisation exceeds 70% to 80% of available capacity it becomes more costly to
conduct and handle additional trade through a port. Vessel waiting times generally increases and
associated cost rise exponentially and would rapidly grow to become unacceptable unless additional
berth capacity is introduced. An outline of the overall system capacity is presented below after which
the capacity and utilisation levels per cargo handling types is described and analysed.

3.1. Capacity in the overall system
The capacities in South Africa’s port terminal for the five different cargo handling types (container,
vehicle (ROROs), dry bulk, break bulk, and liquid bulk cargoes) are summarised Table 1 as extracted
from the Authority’s Long Term Port Development Framework (2013).

Table 1: Overall capacity in SA terminals - all cargo handling types

    All cargo      Terminal      Total     Usable       Berth         Design               Installed         Latent (under)
    handling       area(ha)      Berths    berths       Length(m)     Capacity(TEUs,       capacity (TEUs,   capacity
                                                                      Units, Million       Units, Million
                                                                      tons) per annum      tons) per annum
    Container             367        18           18         5 590           8 013 000          4 790 043        3 222 957
    Roro                   66          7            5        2 050               850 000          681 041          168 959
    Dry Bulk              535        30           25         8 081        229 084 000         187 666 802       17 782 802
    Break Bulk            231        40           37         6 476          32 513 153         17 344 903       15 168 250
    Liquid Bulk           419        18           17         3 715         66 451 2072         26 141 684       40 309 523
    Total               1 618       113         102         25 912
Compiled from Long Term Port Development Framework (NPA) 2013.

Across all the cargo handling types in the port system, there is latent or excess capacity which is the
difference between design and installed capacity across the system. Overall, the highest level of spare
capacity is in liquid bulk terminals with 61% latent capacity – due to inclusion of SBM/CBM volumes,

2
    This includes volumes handled throughSBM and CBM in Durban and Mossel Bay.

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Port Capacity and Utilisation 2015
followed by breakbulk (47%) and container terminals (40%). With 20% and 18% latent capacity
respectively, the Roro and Dry-bulk terminals demonstrate the least amount of latent capacity.
Terminal capacity includes seaward infrastructure (light houses service infrastructure, port control
and safety, entrance channels, breakwaters, turning basins, aids to navigation, vessel traffic services,
maintenance dredging; landward infrastructure (quay walls, back of port operational space, storage
and stockpiling area, roads, rail lines, buildings, fencing, port security, lighting, bulk services); and sea-
land interface (berths and quays). Due to the common- user nature of some of seaward infrastructure,
a comprehensive breakdown and assignment of the value of the asset base and infrastructure to each
cargo handling type in not entirely feasible, at a detailed level, although the tariff strategy has
apportioned a share thereof along the four port user types; shipping lines, cargo owners, terminal
operators and all other lessees in the port system.

3.1.1. Container terminal capacity
A port by port breakdown of the container capacity given previously is captured in Table 2 for
dedicated container terminals. Berth length and draught determine the sizes of vessels the terminals
can handle and how heavily they can be loaded. The ability to handle cargo from a vessel is dependent
on the number of cranes available, through hourly throughput capability of those cranes and the
availability of the cranes.
Table 2: Container Terminal Capacities

    Port        Berth    Total    Usable    Draught     Vessel sizes that      Design         Installed     Latent      Crane
                Length   berths   berths                can              be    Capacity       capacity      capacity    numbers
                                                        accommodated           (TEUs pa)      (TEUs pa)
                                                        (length x width x
                                                        draught)
    Durban      2 578    8        7         8.2     –   Container Panamax      3 020 000      3 020 000     0%          22
                                            12.3        – 4 500 TEUs (240m
                                                        x 32m x 12.0m)
    East        506      03       2         10.7                               93 000         53 390        43%         -
    London
    Port        635      2        2         12.2        Post Panamax x         600 000        325 211       44%         5
    Elizabeth                                           6 600 TEUs (305m
                                                        x40m x 14m)
    Ngqura      720      4        3         16.5        Ultra Large 15 000     2 800 000      491 442       75%         10
                                                        TEUs 400
    Cape        1 151    4        4         12.8 to     Post      Panamax      1 500 000      900 000       40%         8
    Town                                    15.5        6 600 TEUs
                                                        (305m x 40m x
                                                        14.m
    Total       5 590    18       18                                           8 013 000      4 790 043     49%         45

3
  Container volumes at the port of East London are handled at two multi-purpose berths thus exclusion of total and usable berths
in this section.

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Port Capacity and Utilisation 2015
The capacity numbers in all the tables drawn from the NPAs Long Term Port Development Plan shows
the terminals in the port of Durban have reached capacity with installed capacity equalling design
capacity. This is in stark contrast to the port of Ngqura whose container terminal’s installed capacity
is significantly below design such that it operates with 75% latent capacity. The other terminals are
operating at almost half of the determined designed capacities, which means except at the port of
Durban, there is significant excess container terminal capacity. Capex applied for with regards to
container terminal expansion, outside the port of Durban, cannot therefore be easily justified without
determining how much of this capacity can be made available in the system through performance and
efficiency improvements.

The Ngqura Container terminal accounts for the highest
                                                                 The following large vessels called at the
proportion of latent capacity. The depth of a berth, or
                                                                 four dedicated container terminals in
draught, is an important aspect of a terminals capacity
                                                                 2013:
as it determines the size of vessels that can call at a port
and ultimately the extent to which a terminal is used. In           Durban: MSC Fabiola (140,259grt),
the Port of Durban, the berths at Pier 2 (berths 202 –               MSC Luciana, and MSC Ivana (both
205), are the primary container terminals with a                     131,771 grt)
published maximum depth of -12.3m. Pier 1 comprises                 Port Elizabeth: Maersk Labrea and
berths 105 – 107 with a published maximum depth of -                 Maersk Lota (89,505grt)
12.1m. In addition to allowing easy passage for 4 500 TEU           Ngqura: MSC Fabiola (140,259grt);
vessels (generally 240m x 32m x 12m), the terminal can               MSC    Luciana     and   MSC    Ivan
and handles bigger vessels on tide or not fully laden.               (131,771grt)
                                                                    Cape Town: MSC Susanna and MSC
Port infrastructure requires long lead times before                  Joanna (107,849)
additional capacities can be created when required
which     requires      high     levels   of   diligence   and
conscientiousness in assessing capacity development plans submitted by the Authority for
consideration by the port users (in the PCCs and NPCC specifically) and through various other forums
available for influencing the Authority’s capex programme. The Regulator recognises that not all
capacity that seems to be latent will be usable.

For example, there are low levels of utilisation of container terminal capacity at the port of Port
Elizabeth which may be linked to a combination of the depressed economic conditions affecting that
port’s hinterland and thus container traffic on the one hand, and critically the proximity of the port of

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Port Capacity and Utilisation 2015
Ngqura and how this would affect vessel calls to Port Elizabeth especially with Ngqura being a deep
water port attracting larger vessels which would not be able to call in port Elizabeth. A regulatory
concern that starts to emerge, is one of appropriate levels of excess infrastructure that should be
allowed for in the system, in supporting the provision of capacity ahead of demand. A container sector
strategy that identifies and addresses the trade off in the development of container terminals in
servicing their hinterlands and as part of the broader complementary port system is needed.

3.1.2. Container terminal capacity and volumes
With more than 90% of trade moving through the ports, the Authority, in carrying out its mandate of
developing South Africa’s commercial ports, provides capacity to meet not only current but future
demand, to ensure that ports continue to support the country’s economy. As alluded to earlier in the
introduction, in developing terminals to meet demand, a balance has to be struck between providing
infrastructure to meet demand, and optimising non-infrastructure parameters to address capacity, i.e.
improved productivity and efficient use of infrastructure and superstructure. Figure 2 summarises the
use of South African container terminals through the prism of volumes and terminal throughput.

Due to its relative proximity to the Gauteng hinterland and economic hub of the country, the port of
Durban is one of the main drivers of container traffic, followed by the port of Cape Town which
services a major economic region in the country.

Figure 2: Historical container volumes (2001/02 to 2013/14)

The number for Ngqura is from 2009/10 when the terminal was first operationalised.

Volume growth has been on a rising trajectory having more than doubled in the decade from 2001/02.
The accompanying compound annual growth rate for containers was 6.97% (see Table 3). Although

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Port Capacity and Utilisation 2015
the port of Ngqura has registered the highest growth rate, this has been from a very low base where
less than 50 000 TEUs were handled by the terminal when it was operationalised in November 2009.

Table 3 which captures 12 year historical compound annual growth rate              (CAGR) for container traffic in
each of the container terminals shows during this time, overall growth has been driven by the ports
of Durban (6.65%) and Cape Town (5.17%).

Table 3: Historical Compound Annual Growth Rate for Container traffic per port (2001/02 - 2013/14).
                                                 2001/2002             2013/14
  Port of                                        TEUs                  TEUs                     CAGR
    Durban                                                1 228 493               2 660 146              6,65%
    Port Elizabeth                                         261 957                 291 233               0,89%
    Ngqura                                                 34 533*                 713 306             113,19%
    East London                                             68 674                   41 080             -4,19%
    Cape Town                                              496 036                 907 796               5,17%
    Total                                                 2 055 160               4 613 561              6,97%
      Operations only started in November 2009/10.

Volumes from the port of Port Elizabeth and East London have been consistently on the decline, in
contrast to the optimistic projections of future volume growth for this two ports reported later in
Figure 4. The significantly high CAGR number for the Port of Ngqura reflects the low base from which
this port started in November 2009/10 where the 34 533 TEUs it handled set a baseline against which
future increases would be measured.

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Port Capacity and Utilisation 2015
Figure 3: Container volumes: Year on year and Compound Annual Growth Rates (CAGR) 2009/10 – 2014/15.

               Container: Year on year & Compound Annual Growth Rates (2009/10 - 2014/15)
 14.00%
                                     12.46%
 12.00%

 10.00%

   8.00%
                                                6.64%
   6.00%                                                                          5.41%

   4.00%
                                                                                                       3.00%
   2.00%                                                         1.17%                            1.25%

   0.00%
                 2009/10             2010/11   2011/12          2012/13          2013/14         2014/15
  -2.00%

  -4.00%
                 -4.49%
  -6.00%

                                                   YoY        CARG

Overall, the Authority projects container volumes to grow from the current 4 million TEUs per annum
to about 17 million TEUs by 2042. This level of capacity planning is based on a projected 4.8 % (see
Figure 4)   annualised growth rate for container traffic up to 2041/42. Considering that most of the ports
currently handling more than 10 million TEUs are in countries where economic growth rates exceed
South Africa’s growth rate, 17 million TEUs by 2042 may seem too optimistic a number. This
projections may be supported by the 6.9% historical rate in Table 3, including the high growth years
from 2004/05 to 2007/08 which correlated with amongst the highest GDP growth years in SA.

Figure 4 reflects this projected compound container volume growth rates over a 31 year period up to
2041/42 per Container Terminal and the required proportional increase in capacity to meet demand
for the projected volumes. More volumes are projected for the port of Ngqura relative to the other
ports whose volumes are also projected to grow. As highlighted earlier, volume projections for the
port of Port Elizabeth are not consistent with this port’s historical performance. In 2015/16 the
National Port Consultative Committee, after considering recent trends, supported the Authority’s
decision to put on hold the planned deepening of container terminal berths until such time that
volumes and related developments will justify such investments. Similarly, the port of East London’s
volumes are projected to grow by 4% over the period, suggesting a reversal of the -4.19% CAGR of the
past 12 years and growth thereon. Although there is currently no dedicated capacity for container

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Port Capacity and Utilisation 2015
handling in the Port of Richards Bay, the Authority’s plans suggest that in the long run container
capacity may be provided for in this port.

Figure 4: Compound container growth rates and planned capacity to meet growth

                31 year forward container volume estimates and projected capacity
                                           growth rates

                                 7.7%

                    4.6%                                                                  4.8%
                                               4.0%          4.2%
     3.6%                                                        3.4%

                                                   2.3%                       2.4%           2.3%
                       1.3%            1.3%
         0.8%

    Cape Town Port Elizabeth         Ngqura   East London     Durban     Richards Bay      Total

                   NPA's estimated volume growth          NPA's planned capacity growth

Future volumes and capacity requirements are summarised in Figure 5 below. Capacity is captured in
the red line, which reflects current capacity and periods in the future where additional capacity will
be required. As it is impractical to provide for infrastructure for a marginal unit of volume at a time,
providing capacity ahead of demand means the green bars (which reflect surplus capacity in the
system) will always be a feature of this type of graph. Questions to be considered relate to the size of
the bars, in terms of both tariff (affordability to users) and what capacity is required for ports to
continue to play their role in supporting trade and South Africa’s economy. It is important that the
drivers of port specific plans, assumptions about regional/hinterland growth that would support the
projections as well as the role of each port in regional as well as global trade be made clear. The
Authority’s planning principles are informed by these, amongst other considerations, and articulation
of these in a comprehensive container terminal strategy will assist development.

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Port Capacity and Utilisation 2015
Figure 5: Overall container capacity and volume (2010/11 – 2041/42)

The following projects are in the Authority’s future plans:

        2019: Port of Port Elizabeth - The Charl Malan Quay becomes available for handling containers,
         taking capacity from 600 000 TEUs to 900 000 TEUs per annum.
        2020: Port of Durban - Completion of the deepening and lengthening of the North Quay which
         will increase capacity from 3,5million to 3.9million TEUs per annum. An additional 400 000
         TEUs per annum.
        2022: Salisbury expansion by 2 new berths, taking capacity to 5.1million TEUs per annum
         (additional 1.2m TEUs).
        By 2027: Port of Durban - Phase 1 of the DigOut 4 Port completed increasing capacity to
         7.7million TEUs.
        2034: Port of Ngqura - 4 new berths adding 1.4million TEUs.

4 The Regulator has excluded the cost of the Durban Dig-out port from the Regulatory Asset Base because it has not yet been
proclaimed as part of the South African commercial ports system, and therefore does not fall under its economic regulation
jurisdiction and thus tariffing mandate.

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Port Capacity and Utilisation 2015
    2039: Port of Cape Town - An additional berth at the Container Terminal adding 400 000 TEU
         capacity.

The planned additional capacity is based on combined capacities of the ports of Cape Town, Port
Elizabeth, Ngqura, Durban, and Richards Bay. The assumptions are that the Salisbury Island Infill
project for Durban will continue; if it does not happen then the first phase of the Dig-Out Port will be
operational at the end of 2024 with the second 4 berths by 2033, although only 2 would be required
until 2042. The infilling of Salisbury Island would push the Dig-Out Port’s first 4 berths to 2029 and the
rest to 2039. The 2016/17 application by the Authority to the Regulator, includes the following major
container terminal projects to expand capacity over the next seven years:

         Execution of the Pier 1 Phase 2 infill - Salisbury Island;
         Durban Container Terminal deepening (Berth 203 – 205);
         Operationalisation of the port of Ngqura for container handling (automated mooring system
          D101 – 103 ); and
         Container berth expansion (4 berths and extension of breakwater and sand-bypass).

These interventions are meant to maintain current capacity up to 2018/19 where it will grow by
another 400 000 TEUs in 2019/20 and 10,143 million TEUs in 2021/22 and beyond. In the immediate
intervening period, the difference between capacity and use of the terminals (discussed in the next
section below) suggest that there is excess capacity that should be exploited before additional capacity
is provided through new capex. The next section looks at how the current capacity is being utilised.

3.1.3. Container Terminal Utilisation
Due to the legislative framework pertaining to port economic regulation in South Africa, the Regulator
effectively regulates port infrastructure with a lever to address operational performance as part of the
broader mandate, to ensure an effective and efficient port system. On this basis, the utilisation of
South African terminals is looked at from primarily an infrastructure perspective, hence consideration
of capacity utilisation in terms of terminal design and installed capacities. The official numbers are
obtained from the Authority’s various planning documents (up to 2014), data submitted to the
Regulator on request, as well as Transnet’s official data as published in its Annual Reports since 2006.

Overall mapping of annual throughput at container terminal against design and installed capacity
shows low levels of utilisation of design capacity, highlighting excess capacity in the system. In the
previous iteration of this Report in 2014, the Regulator only looked at one year. The Table below
confirms a general trend across the years. As alluded to earlier, this may be explained in the

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Port Capacity and Utilisation 2015
Authority’s approach of providing capacity ahead of demand; however, the variance in utilisation
between design and installed capacity in the system is significant to warrant closer scrutiny of the
causes.

Figure 6: Use of container terminal's design and installed capacity

Installed capacity in SA container terminals is 60% of the published design capacity. Of the installed
capacity, annual utilisation computed from annual TEUs handled in the system shows that terminals
are edging close to fully utilising installed but not design capacities. There is about 41% capacity in the
system that is not utilised. Berth utilisation shows how productively or efficiently the terminals are
used. The Regulator’s previous report (2014/15) focussed on throughput per berth meter and terminal
area, and container moves per ship working hour as an indication of productive and efficient use of
terminals. This section presents results on the Regulator’s analysis of trends relating to terminal
performance as indicators of efficiencies in the system, namely: moves per ship working hour
indicating how fast vessels can move in and out of South Africa’s container terminals, thus how
competitive South African terminals are viewed; time spent by vessels at anchorage as an indicator of
delays, thus congestion in the system; gross crane moves per hour, measuring the moves per ship
working hour contributing to the ship turnaround times; and ship turnaround times.

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Port Capacity and Utilisation 2015
The Regulator will in future also undertake work to confirm the veracity or otherwise of the Operator
Standards (Terminal, Marine, Road and Rail i.e. TOPS, MOPS, ROPS and HOPS) process, to have that
data as input into research and future analysis of productivity and efficiency measures.

3.1.3.1. Container moves per ship working hour
There are various ways of calculating berth utilisation to arrive at how effective the berths are being
utilised or berth productivity. The 2014/15 report focussed on throughput per meter of berth as well
as throughput per terminal area, as covered in the methodology. This Report focuses on berth
productivity as determined through moves per ship working hour/across the ship rate, as it relates to
container terminals. All of the designated container terminals in South Africa are 24 hour operations
and as per the tariff book, open for business 365 days in a year. The berth utilisation hours per annum
for each terminal in Durban, Port Elizabeth, Ngqura and Cape Town is 8 760hrs with East London at 4
576hrs a year. In terms of the UNCTAD berth utilisation factors, the following utilisation rates were
therefore established for the four terminals, as reflected in Table 4 .

Table 4: Container moves per ship working hour – based on design and installed capacities, 2013 performance and 6 year
average

 Container         (1) Berth         (2)Ship rate        (3) Ship rate        (4) 2012/13       (5) Actual        (6) Reported
 terminals         Utilisation       based on            based on             ship rate (ATS)   ATS as per        Average
                   hours (per        design              installed            TEUs/hr based     2012/13           Container
                   annum, using      capacity            capacity             on throughput     Annual            moves per
                   UNCTAD            (TEUs/hr)           (TEUs/hr)                              Report            hour (6
                   factors)                                                                     (TEUs/hr)         years)

 Durban                    42 924                   70                   70                62                52             47
 Port Elizabeth              9 636                  62                   34                30                40             39
 Ngqura                    15 768              178                       31                45                55             47
 Cape Town                 24 528                   61                   37                37                54             49

What Table 4 reflects is the number of hours that each of the terminals should be operating in a year
given the number of berths and published operating hours, assuming they are appropriately resourced
and managed. This is captured in the first column. The next two columns highlight what the moves
per ship working hour should be based on design (2) and installed (3) capacity of the terminals. In the
previous report, the container moves per ship working hours were determined based on 2013
throughput which is presented in (4) whilst (5) captures each terminal’s performance as reported by
the Authority. With this performance measure constantly reported on in the past 6 years, the last
column presents the 6 year average (6). From an infrastructure point of view, column 2 and 3 sets the
performance norm or benchmark for the respective terminals.

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Port Capacity and Utilisation 2015
The port of Durban’s performance results for 2013 is the closest to what it should be based on design
and installed norms. Nevertheless, across the terminals, the container moves per ship working hour
based on design capacity are significantly higher than what is obtained when annual throughput is
used, meaning that if design capacity is used, even the better performing terminals fall short. With
regards to installed capacity, only the port of Cape Town’s container terminal performance is exactly
where it should be in terms of its installed capacity. With the other terminals, the situation does not
change significantly when comparing performance against installed capacity as the performance is still
less than where installed capacity numbers requires it to be.

The results for the port of Ngqura shows how underutilised the container terminal capacity is, even
though its performance is relatively better in relation to installed capacity. Overall, it would seem that
more capacity can be provided in the system by improving the productivity of terminals.

The individual terminal’s performance since 2009/10 as captured in Figure 7 shows a general trend of
unsteady performance on container moves per ship working hour, save for DCT Pier 1 and the port of
Port Elizabeth. Even though their performance dipped in 2013 and 2014 respectively, both terminal’s
performance has generally been improving year-on-year.

Figure 7: Container moves per ship working hour (ATS)

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Port Capacity and Utilisation 2015
DCT Pier 2 and the Ngqura Container terminal, each handling the most containers per ship working
hour in 2013, have not maintained improvements in their performance which has “see-sawed” instead
over the period. Cape Town demonstrates the same unsteady pattern having handled the most
average containers per ship working hour a year earlier in 2012. It is expected that there would be
consistency or an upward trend, up to a point, in the performance of terminals which is not
demonstrated in Figure 7. Next we look at terminal performance in terms of gross crane moves per
hour, a measure for which a target has been set in government’s Medium Term Strategic Framework.

3.1.3.2. Gross crane moves per hour (GCH)

The number of crane moves per hour has been used as a composite indicator for productive and
efficient port operations. Crane moves per hour is different from moves per ship working hour in that
moves per ship working hour indicates how many boxes should be moving over the quay (with many
cranes working), where gross crane moves per hour indicates how many are attributed to a crane. In
a simple example, if one crane is deployed to a vessel and the operation achieves 62 moves per ship
working hour, then crane moves per hour will be 62. However, if 2 cranes are deployed and the same
moves per ship working hour are achieved, then the number will be divided by two. Figure 8 reflects
the number of TEUs per crane for each of the Terminals.

Figure 8: TEU throughput and TEUs per crane

                 2014/15 TEU annual container                         Throughput per crane annum
                         throughput                                            2014/15

 Port of Elizabeth       265 270                             Port of Elizabeth            53 054

          Ngqura              699 928                                 Ngqura                  69 993

       Cape Town                898 994                           Cape Town                            112 374

          Durban                                 2 757 474            Durban                             125 340

                     0     1 000 000 2 000 000 3 000 000                         0   50 000   100 000 150 000

The port of Cape Town has recorded 112 374 TEUs per crane per annum, compared to Durban’s
125 340 TEUs per crane. Durban’s performance compares well with the global average of 123 000
TEUs per crane per year, as reported in 2014. Against this backdrop gross crane moves per hour and
related terminal performance is reported.

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Port Capacity and Utilisation 2015
Figure 9: Gross Crane Moves per Hour (GCH) 2010/11 to 2014/15.

The port of Cape Town, where gross crane moves per hour numbers are higher than at the other
terminals and generally increased since 2010, has seen a slight decline in 2014/15. With the other
terminals there is no consistent performance reflected in the ups and down. This might be a function
of the performance target setting process (discussed below) where targets are based probably on
previous performance rather than a set standard or even stretching of previous performance.

The terminal’s average gross crane moves per hour performance over the last 5 years (2009/10 –
2014/15) has varied significantly year-on-year and is still below the 2014 – 2019 Medium Term
Strategic Framework target of 35 moves per hour, set to be achieved by 2019, a target that only the
port of Cape Town came close to in 2013 but has not sustained since. The average performance for all
terminals shows that more effort is required if the MTSF target is to be met by 2019 since to date,
average performance by all terminals is yet to reach 30 moves per hour and beyond.

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Port Capacity and Utilisation 2015
Figure 10: Average GCH: Container Terminals (2009/10 to 2014/15)

Table 5 summarises the year-on-year improvements in GCH since 2010/11 and the compound annual
rate for the period. Cape Town (8%) and Ngqura (5%) registered overall improvements from 22 to 32
GCH and 21 to 27 GCH respectively.

Table 5: Year on year GCH and 5 year compound annual growth rate

            Terminal            2010/11      2011/12       2012/13      2013/14   2014/15 5YR CAGR

           DCT Pier 1                24%          4%          -15%          4%        -8%            1%

           DCT Pier 2                5%          -9%           33%        -11%        -4%            2%
                CTCT                 14%        12%            11%         10%        -6%            8%
                PECT                 9%           8%               0%     -11%        0%             1%
                 NCT                 14%        25%                7%     -19%        3%             5%

DCT Pier 2 recorded a significant improvement in crane moves per hour in 2012/13 but has not
maintained the momentum since, only managing a compound annual growth rate, or improvement,
of 2% over the period. Except for 2014/15, the Cape Town container terminal leads the country’s
container terminals with consistent double digits year-on-year improvements in gross crane moves
per hour, and an overall 8% improvement over the period. Ngqura container terminal follows with an
overall 5% compound growth rate which is marred by a significant year-on-year 19% reduction in
performance for 2013/14. The Port Elizabeth terminal’s performance has gradually decreased and
stagnated during the 5 years, with the positive changes of 2010/11 and 2011/12 not repeated since.
Figure 11 looks at targets that are set per port to understand the varied performance by the terminals.
The target bars are all green and each of the bars with a red outline represent actual performance
below the set target.

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Port Capacity and Utilisation 2015
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